Quadrangle Group's $12 million settlement to clear its name is casting a darker cloud over ex-founder Steve Rattner (pictured), who is repordedly still a target of a state probe into the activities of one-time political lobbyist Hank Morris.Bloomberg

The Quadrangle Group yesterday agreed to cough up $12 million and publicly denounce one of its founders, Bloomberg pal and former car czar Steven Rattner, ending two damaging probes into its New York pension fund deals.

The concessions allow the embattled investment firm to escape further scrutiny as part of Attorney General Andrew Cuomo’s years-long investigation into whether state retirement-fund officials and their cronies illegally profited by steering billions in fund investments to favored firms.

Quadrangle promised to “fully cooperate” with investigators and blasted the tactics that Rattner used to secure a $150-million pension deal.

“We wholly disavow the conduct engaged in by Steve Rattner,” the company said in a statement. “That conduct was inappropriate, wrong and unethical.”

Sources said Rattner remains a target of the probe into Hank Morris — the longtime political guru to disgraced former Comptroller Alan Hevesi.

“Mr. Rattner does not agree with the characterization of events released today, including those contained in Quadrangle’s statement,” said Rattner’s attorney, Jamie Gorelick. “Mr. Rattner shares with the New York Attorney General the goal of eliminating public pension fund practices that are not in the public interest. He looks forward to the full resolution of this matter.”

Rattner — a close friend to Mayor Bloomberg and a big-time Democratic fundraiser — founded Quadrangle with four other businessmen a decade ago. He left the firm to serve on President Obama’s auto industry task force in February 2009, but quit after just four months on the job. He is currently writing a book about the car business.

Quadrangle, which focuses on deals in the media and communications sectors, has struggled since it and its founder were swept up in the sweeping pension probe.

Two months ago, Bloomberg revealed he would move $5 billion of his personal fortune out of the firm’s asset management unit — along with the people who managed Bloomberg’s money.

Quadrangle agreed to pay the state $7 million and adopt a code of conduct devised by Cuomo.

“The principals involved in the conduct at issue here are no longer with Quadrangle,” Cuomo spokesman Richard Bamberger said in a statement.

The company at the same time paid the feds $5 million to settle a parallel investigation by the Securities and Exchange Commission.

Prosecutors believe Morris used his access to Hevesi aides to help Rattner secure a $150-million pension fund investment in March 2005. While that massive deal was in the works, Rattner brokered a distribution deal for a failed movie produced by a brother of the pension fund’s manager.

The Quadrangle settlement was one of five deals announced yesterday by Cuomo, whose investigation has stretched from coast to coast and so far netted six guilty pleas.